When it comes to home ownership, there are a number of issues that could affect your ability to sell your property. One of these is known as a lien. A lien is defined as a charge upon real or personal property for the satisfaction of fulfilling a debt. In other words, if there is a debt owed, the creditor can put a claim on your property unless the debt is paid. Liens take the form of both voluntary and non-voluntary, but either can make selling your property difficult.
Voluntary vs. Non-voluntary Liens
A voluntary lien generally means that a debtor has agreed to use their home as collateral when taking out a mortgage payment. A non-voluntary lien typically means that an outside debt is owed, and a property will be seized as repayment. This can include back taxes, child support due, or other debts owed to the government or an individual.
If you’re involved in a lawsuit and end up losing, a judgment lien could be placed upon your property. This means that to recover the amount owed to the winning party, your property could be used—involuntarily—in lieu of a cash payment.
In a tax lien, a homeowner owes a large enough amount in back taxes that a government entity—be it the IRS or state—has to place a lien on the property. If the amount owed isn’t paid back, the homeowner is forced to pay back the debt using the value in their property.
Child Support Liens
Parents who are owed child support by a former partner may place a child support lien on the opposing party’s home. This means that unless the amount owed in child support isn’t paid, the debtor’s property will have a lien on the title.
A mechanic’s lien occurs when a contractor or subcontractor who’s done work on a house isn’t paid. In order to recover the amount owed from the home improvement or maintenance project completed, they can place a lien against the house in question. An important thing to note with mechanic’s liens is that it doesn’t matter whether you’ve already paid for the project; if the subcontractor isn’t paid by the general contractor, the sub can come after the homeowner and put a lien on the property.
Family Law Real Property Lien
In divorce cases, when one party is owed by the other, the debtor’s home can have a family law real property lien placed upon it. Like other liens, it implies that the home’s value will be used to recover the amount owed to the creditor. Divorce can be hugely expensive, and these types of liens help the attorneys and former partners get compensated.
Having a lien placed on your home doesn’t necessarily mean it’s going to be foreclosed or seized. Rather, it can often be alleviated by paying the amount owed to the creditor. Regardless of the type, it is important for homeowners to understand what liens mean on their title, and how they can properly address them.
If you have additional questions regarding this topic, or would like to get more information about buying or selling your home in the Seattle area, please contact us; we’d love to help!